Building Digital Capacity in the Tees Valley Combined Authority

(This post was written as an assignment for DPI671M, a course at the Harvard Kennedy School of Government)

In 1826, the English chemist John Walker invented the first successful match in Stockton-on-Tees. While he was encouraged by Michael Faraday to patent the creation, which he called ‘friction lights’, Walker said “I doubt not it will be a benefit to the public, so let them have it.”

This combination of innovation and public commitment sits at the core of the Tees Valley, and has informed the regions steps to date to create an inclusive form of industrial growth. The next step for the Tees Valley Combined Authority (TCVA), and the new metro-mayor, is to rediscover this spirit of public innovation as it relates to government.

Here, I want to make the case that TCVA should form a Digital Government Unit (DGU) to drive an improved relationship with both citizens and business. I’ve set my argument out under the following questions:

• Where are we now?
• What is the TCVA’s strategy?
• Where does digital fit in?
• What are Digital Government Units?
• How do we create a Tees Valley GDU?
• How do we build a digital government in Tees Valley?

This piece builds on two previous blogs, one exploring the relationship between digital and devolution, and the other applying Theo Blackwell’s framework for building local government digital capacity to metro-mayors.

Where are we now?

The Tees Valley Combined Authority (TVCA) covers a population of 700,000 across the five local councils of Darlington, Hartlepool, Middlesbrough, Redcar and Cleveland, and Stockton-On-Tees. It was created by a devolution deal with Westminster in 2015 that was focussed on powers relating to economic development, transportation, and adult skills, and also came with a 30 year ‘gain-share’ (early investment of expected national economic gains from central government) worth £15m per year. The Combined Authority was officially formed in May 2016, and received its first directly-elected ‘metro-mayor’, Ben Houchen, in May 2017.

Tees Valley faces real challenges. Economically, de-industrialisation has been difficult for the region and the closure of SSI Redcar Steelworks in 2015 had an impact that is difficult to overstate. Yet, in Lord Heseltine’s report ‘Tees Valley: Opportunity Unlimited’, he comments that: ‘the [SSI] site itself is only a part of a much bigger picture. Four miles of the south bank of the Tees is a scene of desolation, a memory of industrial activity now gone.’ There is also a severe shortage of housing, a high level of unemployment, and an ageing population. This is all against the backdrop of an often unfair public portrayal — the second season of the controversial documentary Benefits Street was filmed in Stockton-on-Tees.

Despite these challenges, Tees Valley is characterised by a wealth of potential. It is home to a number of high quality universities with strong international reputations, particularly for digital and creative courses. There are high levels of innovation, with the fourth highest proportion of businesses undertaking product or service innovation in the UK. The creation of the first Mayoral Development Authority outside London, opened by the Prime Minister in a visit to Tees Valley last year, demonstrates the centrality of the region to the Northern Powerhouse agenda.

What is the TCVA’s strategy?

Tees Valley’s current strategic priorities focus on supporting business and laying the foundations for economic growth, through investment in skills and business development. There is a particular emphasis on the creation of a circular economy — the idea that the waste and by-products industry should be utilised by other organisations in the area to promote both integration and efficiency of the local economy.

Source: Tees Valley Strategic Plan

In addition, there is a longer term political focus on acquiring additional powers around public service delivery, particularly health and education, and local revenue generation. Other areas, such as Manchester, gained these additional powers in their original devolution deals given a longer history of delivery at the local level. Recognising this trajectory, Tees Valley’s devolution deal states that it ‘paves the way for further devolution over time and for the reform of public services to be led by Tees Valley’. The key to unlocking these new powers is demonstrating that TVCA can add meaningful value to the 700,000 people and 16,500 businesses in the region.

Where does digital fit in?

TVCA have already recognised the importance of digital in the region. Their recently published Sector Actions Plans highlight digitisation as a key enabler of economic growth, particularly focussing on mobile internet, cloud technology, and the internet of things. This recognises the emergence of a nascent digital economy in Tees Valley, with 970 companies providing a combined GVA of £380million. Organisations like the North East and Tees Valley Digital Catapult and the TVCA’s DigitalCity also exist to support start-ups and small businesses working in this space.

Source: Tees Valley Sector Action Plans

Yet there is relatively little focus on what the Combined Authority itself can do through digital to support the region’s transformation. The notable exception is the material on ‘smart regions’ in the longlist of proposed interventions in their Sector Action Plan, which argues for globally competitive broadband speeds as well as the creation of an ‘integrated learning region’ which uses data to develop policy interventions. However, there is no matching ambition around digital, which may partially be due to the fact that TVCA is not responsible for major service delivery — aspects like business support are procured from private providers and contracts are then managed by CA officials.

However, there are clear areas for opportunity moving forward to re-examine processes and consider whether they could be enhanced using digital. The wholesale transfer of responsibility for adult education later this year, the upcoming change in investment streams caused by Brexit, and the vision for a more active role in bringing together businesses as part of an integrated, circular economy all represents key moments of change for the CA to harness.

To understand the opportunity that digital government services may provide, and the organisational forms that make transformation possible, Tees Valley should look to international experience.

What are Digital Government Units?

Digital Government Units (DGUs) are a relatively recent phenomenon, with the first arguably being the UK’s Government Digital Service, created in 2011. Each unit has its own governance and theory of change, and some shun the DGU title, but they all share a few broad attributes:

• Small and centralised in-house teams, often hired from outside government
• Expertise in digital, data, and technology
• Focus on agile methodologies and user-centred design, including regular testing and piloting of products
• Emphasis on the delivery of projects at pace
• Use of open source and platform models

In their respective countries, they have been able to deliver transformative programmes, including:

Government Digital Service (UK) — The creation of the gov.uk website, a single access point for all government services which won the Design of the Year award in 2013, beating the Shard.

United States Digital Service — Transforming the online application process for healthcare for the 9 million veterans served by the Veterans Health Administration.

New Zealand Digital Government — Launched SmartStart, a user-friendly, integrated wrap-around service for pregnant mothers to support 60,000 healthy births a year.

Although there are many differences between these groups, I want to dig into two specific trade-offs that are central to the group’s theories of change to consider what could be possible in Tees Valley.

Extensive vs Limited Power

In the context of DGUs, power means two things. The first is having actual policy levers at your disposable, either through control of funding streams, hiring processes, or procurement decisions. The second is having political cover, so you can actually use formal policy levers when presented with challenges.

Directive vs Collaborative Style

Directive GDUs make change by getting hands-on — going in to departments and either picking up the work themselves or firmly instructing others to make changes. This is often employed when the stakes are high, and there is a need to move quickly. Collaborative GDUs instead build coalitions across departments and leverage existing resources to deliver digital reform.

Directive — Extensive Power

In very different environments, both the United States Digital Service and Estonia’s Government CIO have utilised their broad powers and strong political cover to direct change from the centre.

In the USDS case, a small unit was created within the White House in the wake of the healthcare.gov disaster to prevent future mistakes occurring. The team would parachute into federal agencies and take control over projects like website re-designs and reforms to online processes.

In Estonia, the inheritance of a fairly sparse governmental infrastructure in the early 1990s meant that political leaders had the chance to do things dramatically differently. They provided every citizen with a unique online ID, and used it to integrate all government services, including taxes, voting, and welfare. Their agility may have been aided by having a population of only 1.3 million.

Collaborative — Extensive Power

In other environments a directive centralised approach has not been appropriate. New Zealand, for example, have adopted what they call a ‘Digital Government Partnership’, bringing together individuals from across departments under the leadership of the government’s CTO. However, underpinning this approach is budgetary authority over technology spend, which ensures that collaborative overtures are complied with.

New Zealand argue firmly that they are not a GDU, and instead say that their theory of change is far more about building dispersed digital capacity. Yet their method of making change, driven from the centre and focussed on the user, is similar enough to a GDU to be illustrative for Tees Valley’s purposes. Their population, at 4.5 million, also make them a more reasonable comparison to a UK region than other national examples.

Collaborative — Limited Power

When GDUs have not had the ability to control a wide range of policy levers, they have adopted innovative tactics to drive change.

David Block-Schaefer, after being hired as the CTO of the MBTA (Boston’s public transport network), initially used large tech procurements to begin improving user experiences. This included a $723 million contract for a new fare collection system, with a results-driven contract that ensured there was a continuous focus on the user and not on the fixed requirements of the bureaucracy. The MBTA team also worked with other departments to identify problems they were struggling with, such as how to effectively notify passengers of disruptions or how to improve the rider experience on buses, and co-designed solutions that leveraged digital tools.

18F worked as an in-house digital consultancy with US federal government agencies. In contrast to USDS, they are requested and hired from departments who are facing challenges, and embed themselves alongside public servants to try and assist them as opposed to instruct. Successes of the team include building College Scorecard, which makes data accessible and digestible to help students compare further education options. However, there have been questions about dwindling demand for 18F’s services, which is a concern given their need to be commissioned in order to act.

Directive — Limited Power

In some ways this area is the graveyard of over-ambitious GDUs. Overly directive approaches often lead to negative responses from senior public servants, meaning that they begin to lose political cover and then the ability to use their nominal policy levers.

How do we create a Tees Valley GDU?

As outlined above, TVCA’s primary goal at this moment is to use the powers it has been given by central government to support economic growth. This involves supporting businesses, building skills, and leveraging investments. In all three of these areas, digital solutions may be the key to unlocking more added value at the combined authority level.

However, government digital innovation faces two constraints. Firstly, TVCA has limited and defined powers, and an understandable preference for commissioning as opposed to delivering services. Secondly, the TVCA is formed of a number of local authorities as well as a Local Enterprise Partnership (LEP) who have their own constituencies and responsibilities. It is not feasible, or desirable, for the TVCA to attempt to direct and instruct different local authorities or businesses to change.

Given these constraints, of both limited power and the inability to take a directive approach, TCVA should learn from both the MBTA and 18F. Key lessons from their approach involve:

• Being squarely focussed on real user problems, manifested as concrete problem statements, to ensure that they could tightly concentrate their limited powers
• Working closely with colleagues outside of the GDU, harnessing their insights and expertise, to ensure the resilience of the solutions they designed
• Identifying talented leadership from outside of government, to bring fresh perspectives on what’s possible and question how things have always been done

TVCA should therefore consider pursuing the below roadmap to deliver digital reform:

1 Hire a Chief Digital Officer who understands the latest approaches and tools from the private sector, potentially leveraging links with DigitalCity to ensure an understanding of the unique Tees Valley economy.

2 Task the CDO with building a collaborative cross-regional team by identifying ‘digital champions’ (or ‘digital enthusiasts’) within each local authority and the LEP to work part-time or take a secondment.

3 Use existing business research or examine data on complaints or service usage to identify a problem that businesses are experiencing in their interactions with the Combined Authority, or an area where they are unaware of support/investment the CA can provide.

4 Conduct in-depth field research with users who are experiencing the problem to get a detailed and contextualised understanding of the challenge they are facing.

5 Develop, beta test, and iteratively improve digital tools and reformed processes to begin addressing the problem. Pilot the tool, make adjustments based on feedback, and then launch across the region.

6 Monitor and evaluate the impact of the tool, and consider lessons for future projects. Review the ways of working among the cross-regional team, and consider any amendments to organisational form before launching the next project.

To build a sense of momentum among the team, and to ensure a focus on delivery that has an impact on businesses and citizens, steps 2–5 above should happen at pace — ideally in no longer than six months.

Although problem statements should be developed carefully by the team in the TCVA DGU based on user research, the following suggestions (based on the Sector Action Plan research, page # for reference) serve as examples for the team to undertake their work:

There is a mismatch between job vacancies and skills that worsens both unemployment and low productivity (p15)

• What would aid communication from business to the market of what they need?
• How could education providers better understand these needs?
• How could young people, or adults looking to re-train, best identify these skills gaps?

There is limited leadership capacity in the cultural sector (p17)

• What might integrated and collaborative cultural leadership look like?
• How could a destination management function be set up for success?
• What motivates or concerns potential visitors to Tees Valley?

There are high costs to investing in innovation and a limited awareness of funding opportunities (p19–20)

• How can we most effectively highlight existing investment streams to all businesses?
• How can we design investment applications to encourage collaboration?
• What do networked investments in innovation look like?

We have undiversified markets, and need to encourage both FDI and high exports (p21)

• What tools do international companies need to effectively engage with Tees Valley?
• Are there barriers to entry for small companies in Tees Valley to export, particularly in digital and creative industries?
• Are there interventions that could make it easier for small and medium international companies to invest in Tees Valley?

A quick note on data — it has been rightly argued that an Office of Data Analytics be created within city regions to harness the benefits that data can provide in terms of government efficiency, effectiveness, and legitimacy. This should be a central priority for Tees Valley, as outlined in the ‘Smart Region’ element of the Sectoral Action Plan mentioned above. In this regard, data and digital should be seen as mutually supportive and integrated activities, with data leading to a more sophisticated understanding of the challenges users face and digital services seeking to solve those challenges.

How do we build a digital government in Tees Valley?

As TCVA delivers on its strategic ambitions, supported by a DGU that drives more effective services for businesses and citizens, the requirements for digital reform will change. Further devolution of powers, particularly over the delivery of public services, may well bring with it a more empowered DGU that is able to design platforms and services directly for citizens. This may require changes in organisational form, such as an expanded centralised team with software design expertise. This is why the review step set out above is so crucial — the team should not just develop solutions in an agile way, but should itself be agile, iteratively reforming and adjusting to the requirements of the next problem.

Looking further into the future, Tees Valley should leverage its existing reputation as a tightly integrated economy and society to consider a more radical reform of the role of government. Utilising new digital capabilities in the private sector, a highly technologically literate citizenry, and a new suite of digital government services, TCVA could begin to move away from traditional government departments and service delivery mechanisms and towards a more diffuse model of ‘government as a platform’ (also theorised as ‘Lego government’). While this arrangement is a long-term goal, it should frame concrete steps taken over the next decade by highlighting the fundamental way that digital shifts power relationships and the shape of government.

Conclusion

Tees Valley has a unique opportunity to demonstrate what sustainable, equitable, and large-scale post-industrial growth looks like. TVCA have already taken impressive steps to grasp this opportunity, by utilising traditional policy levers to foster economic development. The key to further progress is building internal digital capacity to radically alter the impact the TVCA has on businesses and citizens. Doing that means:

Short-Term: Building a cross-regional digital team, led by a Chief Digital Officer, to design, deliver, and launch new digital tools and services

Medium-Term: Capitalise on successes to gain broader devolved powers, and use digital tools to design public services around citizens

Long-Term: Re-imagine the role of government in Tees Valley, using digital platforms and services to facilitate economic and social growth

In 1826, a Tees Valley chemist gave the world the ability to create fire in an instant. Through digital, the region could realise a Promethean transformation again.

(This post was originally written as an assignment for DPI671M, a course at the Harvard Kennedy School of Government)